The Bank of England (BoE) decided to hold interest rates at 5.25% after 14 consecutive hikes, with five voting members in favour and four against. The banks decision means that the cost of borrowing for commercial banks remain at 5.25%, still the highest level since 2008.
This news comes a day after a surprise slowing in the UK’s accelerating CPI. Until inflation data on Wednesday markets had priced in an 80% probability on the BoE hiking 25bps. On Thursday morning the probability had fallen to 50%
The decision to pause came down to a knife-edge vote, with five voting members in favour of maintaining 5.25% and four against. Despite the halt, the bank did not rule out the possibility of future rate hikes this was further reinforced by the fact four out of the nine members voted to hike.
“There are increasing signs of some impact of tighter monetary policy on the labour market and on momentum in the real economy more generally,” the Bank said in a statement.
The decision led to the pound by 0.9% the lowest level since March and British stocks outperformed the wider market. Sterling was last down 0.53% at $1.2278 at 13:45.